West Coast specialist hard-coking coal mine developer Bathurst Resources yesterday received $18.9 million from institutional investors to boost its flagging cash reserves, on its way to raising up to $20.9 million.
The $18.9 million, or final tally, is being picked as the first of a series of capital-raisings and its share price will be under close scrutiny for weakness in the months ahead. A share purchase plan to shareholders is being considered by Bathurst.
Its shares had been on an extended trading halt while it undertook the book-build.
Bathurst, estimated to have spent up to $300 million developing its controversial open-cut operations around the Denniston and Stockton plateaus above Westport, has been hamstrung by legal challenges from environmental groups, putting back operations by about two years.
Analysts first raised questions about Bathurst's cash in hand in July, noting it held $53.8 million 13 months ago, then $17.6 million by March this year. Yesterday that had more than halved to $8 million.
Delays to Bathurst's production have been reflected in its share price, and shareholder frustration. After it listed in November 2010 at 74c, the price rose to a high of $1.70 by May 2011, but has since fallen off to trade around 20c, or lower.
Bathurst has estimated it needs more than $105 million during the next three years to get production from 640,000 tonnes to beyond 1 million tonnes per year.
Craigs Investment Partners broker Peter McIntyre said the predominantly Australian-based investors would not be surprised by the capital-raising, knowing Bathurst would be ''chewing through cash'' while it faced production delays, legal costs and worked through the consenting process.
''I think this could be the first of a series of capital-raisings. The reduction in cash balance means a need for capital to keep their funding lines open ... to get to their goal and ramp up production,'' Mr McIntyre said.
In year one, Bathurst estimates capital costs at $19.9 million, including $6.6 million for producing domestic thermal coal then a total of $85.7 million during years two and three.
A recent independent report on Bathurst notes it sells about 240,000 tonnes of domestic thermal coal each year, from its Cascade and Takitimu mines.
After five years it wants to be selling 2.5 million tonnes - 2 million tonnes of specialist hard-coking coal for exports and the 500,000 tonne balance domestically.
Mr McIntyre said while the economic downturn in China had hit most resource sector companies ''particularly hard'', as commodity prices plunged, there were enough economic positives to keep Bathurst confident of export success.
In mid-August, Bathurst bought a small thermal coal mine near Christchurch for up to $600,000 in a deal to supply a dairy processing plant with 55,000 tonnes of coal annually.
Before court
Legal challenges outstanding against Bathurst Resources
Environment Court, appeal
Interim decisions issued March and August 2013.
Resolution of consents outstanding - court continues to indicate it is likely to grant consents
Awaiting court's final decision.
High Court, appeal.
Forest & Bird application for leave to appeal decision on Sullivan declined July 12, 2013
Forest & Bird applied for special leave from Court of Appeal to appeal.
Bathurst opposed this application.
Supreme Court, appeal.
Hearing March 2013 on climate change issues
Awaiting decision (cannot be appealed further)
Source: Bathurst Resources
